Whether you live in the Chicago area or not, chances are you stumbled across this article while searching for a Chicago financial planner or virtual financial advisor. The good news? You’re in the right place! 

And because you’re here, I assume you have a few pressing issues in your life that have led you to believe your financial situation needs a bit of help.

Plan for your retirement to secure your financial future

Perhaps you and your wife are three years from retirement, the accounts look good, and you’ve invested and saved, but what’s next? How do you make your hard-earned retirement last the next 10, 20, or even 30 years? 

Or maybe, in a tragic turn of events, you lost your spouse much sooner than you thought possible, and you’re completely lost. 

You need insight, empathy, and advice to streamline your financial future. You and your spouse's fortune needs to be properly managed so your children and grandchildren can reap the benefits of your dear ones' long and hard years in the workforce.

At Outside the Box Financial Planning, I invite you to pour your favorite drink, enjoy the summer breeze, and be assured my experience in the financial industry will help you through any financial adventure. Here are 6 reasons why my services and expertise can meet your financial planning needs in the richest season of your life.

Planning for your future can be a breeze with Outside the Box Financial Planning

1. With Outside the Box You Get More…

• More experience.

• More continuing education. 

• More knowledge of the financial industry.

You know there is so much more to building wealth than simply making money. Where will your hard-earned money grow and compound the best? What accounts are needed in the current market to ensure you don’t lose your retirement? 

Continuing education is just one of the many ways to stay up to date with the ever-changing financial world. I strive to improve my understanding of what makes a healthy financial portfolio and how to navigate the financial waters. After educating myself, I pass on my knowledge to you in easy-to-understand language so you can thrive and make sound decisions for your life and family.

And when retirement comes, you can count on me to supply you with Social Security claiming strategies and Medicare options. This gives you a chance at a retirement free of stress and full of abundance. 

With over 10 years of experience in the financial industry, I can identify the trends and changes to better anticipate the rollercoaster that accompanies financial growth.

Think outside the box for your financial planning

2. I Am A Fee-Only Financial Planner

What Does Fee-Only Mean? 

There are two models of compensation for financial advisors; commissions-based and fees based. A commissions-based advisor is very similar to a car salesman who earns his income based on the price of the car. The more he sells, the more he earns. This type of model makes it difficult for the client to receive completely unbiased advice. 

Put simply, the commission-based advisor is more prone to bias and doesn’t always work in the client's best interest. His protocol may encourage him to sell products to the client that aren't particularly necessary, causing the client's money to be spent needlessly. 

As a fee-only financial planner, I only charge one fee based on the package we choose that best fits your needs. 

Why Should You Choose a Fee-Only Financial Planner?

When you choose to work with someone, you need to know they have your best interest, right? This is especially true when your finances are involved. You need to know that any advice given is sound and honest with no hint of upselling on a product. 

You can relax knowing that when you work with me, I will always advise based on what is in your best interest, not mine. 

Once we choose the best course for your needs, I am available for advice at any time (within business hours, of course), unlike a commission-based advisor who is restricted to the limits of the services chosen. 

Get unbiased advise with the fee-only services offered at Outside the Box Financial Planning

3. I Am A Certified Financial Planner (CFP)

As a Certified Financial Planner (CFP), I have undergone rigorous training to ensure my unbiased and well-educated advice is the best in the market. 

CFP is a formal title given by the Certified Financial Planner Board of Standards, Inc, which requires thorough training beyond that of a generic financial advisor. The training includes: 

• Numerous standardized tests

• Commitment to a code of ethics

• Formal education

All of this ensures you are getting the best advice for your financial situation possible. 

And most importantly for the client, CFPs are fiduciaries, which means they swear to always help make the best financial decisions for their clients, not in the interest of filling the advisor’s checking account. 

You can trust that every service provided keeps your success at the forefront of every decision. 

4. I Am An Expert In Retirement Management 

Retirement should be filled with adventure and joy. You have worked tirelessly to earn your wealth and now you get to enjoy it.

As I mentioned above, I have a vast array of knowledge surrounding retirement topics. I have specific programs that will help you focus on retirement planning and lifetime tax minimization. There are numerous retirement options and I understand how overwhelming it can be to make the “right” decision. 

My consultations will give you the peace of mind you deserve after years of working hard to build your nest egg. 

With Outside the Box Financial Planning, get peace of mind knowing the nest egg you've been building will sustain you in your retirement

5. I Am A Virtual Financial Advisor

You want to travel the world and explore places you’ve always dreamed of. Or maybe you want to hop in an RV and travel America to visit your 12 grandchildren. Either way, your financial well-being doesn’t have to stay within the confines of Chicago. 

So if you're on the beach of Greece and you get a notification that your stocks plummeted, give me a call, and I’ll encourage you and remind you of our strategies. Additionally, if you decide to retire on the sunny beaches of Florida, you won’t lose me. You’ll continue to receive the consistent support you’ve come to rely on. 

But if you are in Chicago and want to chat over coffee on Michigan Ave while watching the bustle of tourists, I’m eager to chat about wealth management and whether Gino's East or Giordano’s is the king of deep dish.  

Our relationship also doesn’t have to begin with you being in Chicago. If you’re on the west or east coast, or anywhere in between, I’d be happy to help you on your time, completely virtually. 

6. Outside the Box Is An Intimate Financial Firm 

You’ll never have to worry about waiting on hold for hours on end only to be met by an automated machine. My firm is small and will stay small so that I can meet all the needs of my clients and “do life” with them. My ambition has never been to grow for growth's sake, rather, I want to serve a small number of clients to the best of my ability. 

Our relationship will grow and mature as your finances do. You will always receive custom advice that is transparent and tailored to your needs alone. You’ll also feel like you have a friend in the business. I make complicated news and unfamiliar terms easy to understand and relevant to your situation. 

Outside the Box is committed to keeping a client load that allows for personal relationships and a high level of expertise to support your complex financial needs.

At Outside the Box Financial Planning, you get my undivided attention and can rest assured that I have your best interest in mind

Think Outside the Box and Receive Peace of Mind

Financial planning doesn’t have to be overwhelming. At Outside the Box Financial Planning, I understand your wealth has taken years to accumulate and you want it to be managed well. 

I want you to feel at peace while you travel the world, snuggle with your grandchildren, or pursue new hobbies. To see if we can help you better understand your investment options or wealth management, click here to schedule a conversation today. 

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Partnering with Outside The Box Financial Planning offers numerous benefits for individuals seeking retirement planning, small business support, wealth management, and beyond.  With their fiduciary duty, comprehensive approach, unbiased advice, transparent fee structure, and ongoing support, OTBFP act as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations. 

However, if you would like to take a shot at building a financial plan on your own, we offer our financial planning software, RightCapital, free of charge. Click here to get started.

Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.

Markets Have Good First Quarter

Global equity markets had a good first quarter – especially the tech names. And interestingly, in the fourth quarter of 2022, global equity markets also had a pretty good quarter – except for the tech names.

When the final Wall Street bell of the quarter rang out, NASDAQ had turned in its best quarterly gain since 2020, and the other three major U.S. equity indices turned in solid results too.

For the first quarter of 2023:

• The DJIA advanced by 0.5%;

• The S&P 500 gained 6.9%;

• NASDAQ jumped 16.8%; and

• The Russell 2000 added 2.3%.

The themes that drove market performance in the first quarter centered around inflation, the Fed, and the labor market, as recent inflation numbers hinted at a potential decline. In contrast, labor market numbers suggested that the Fed could continue its pace of rate hikes further into the year.

This quarter's other big theme was a new banking crisis – as Silicon Valley Bank and Signature Bank failed – with SVB being the largest bank failure since 2008. That helped push gold close to its record high.

And as a surprise to many, cryptocurrencies extended their recovery from 2022's disaster, with Bitcoin leaping more than 50%.

Further, we saw that:

• Volatility, as measured by the VIX, trended down this quarter, beginning just north of 21 and ending just shy of 19, although there was a significant spike in mid-March.

• West Texas Intermediate crude also trended down for the quarter, starting at just over $80/barrel and ending at just over $75, with a low of $67/barrel in mid-March.

Market Performance Around the World

Investors were pleased with the quarterly performance worldwide, as all 36 developed markets tracked by MSCI were positive for the first quarter of 2023 – that’s the second quarter in a row that saw all 36 MSCI developed market indices green. And for the 40 developing markets tracked by MSCI, only 28 of those were positive.

Source: MSCI. Past performance cannot guarantee future results

Sector Performance Rotated in Q12023

The overall sector performance for the first quarter of 2023 was ok, as 4 of the 11 sectors lost ground. But of the seven sectors that gained ground, the gains were significant. Compare that to the overall trend for the fourth quarter, which was good, as 9 of the 11 sectors advanced, with six advancing by double-digits, and going back to the third quarter of last year, which was ugly, as 10 of the 11 S&P 500 sectors dropped with only Consumer Discretionary staying positive.

Finally, as happened in each quarter last year, the performance leaders and laggards rotated throughout the quarter, and the ranges were substantial.

Here are the sector returns for the first quarter of 2023 and the fourth quarter of 2022:

Source: FMR

Reviewing the sector returns for just the first quarter of 2023, we saw that:

• Only 7 of the 11 sectors were painted green, although the Information Technology and Consumer Discretionary sectors made giant leaps;

• The defensive sectors (think Utilities and Health Care) struggled during the quarter

• Financials – not surprisingly – was the worst performer, driven down by two significant bank failures; and

• The difference between the best (+21%) performing and worst (-6%) performing sectors in the first quarter was massive.

Two Interesting Rallies This Quarter

Volatility in the Treasury Market

The Fed Raises Rates Again

One of the most talked about events this quarter was the Federal Reserve’s policy meetings, and as expected, the Fed raised official short-term rates by 25 basis points in late March. Further, the “dot plot” pointed to hopes that the Fed might stop raising rates after one final one in May. Most interesting is that the fed funds futures markets ended the week pricing in a 98.2% chance that rates would end the year lower – with a whopping 95% chance that cuts would start this summer.

Source: CME Fed Watch

For perspective, it was almost exactly one year ago, on March 16, 2022, that the Federal Open Market Committee enacted the first of what would become nine consecutive interest rate increases.

GDP Up 2.6% in 4th Quarter

As the quarter ended, the Bureau of Economic Analysis reported that the real gross domestic product increased at an annual rate of 2.6% in the fourth quarter of 2022. In the third quarter, real GDP increased by 3.2%.

This is the “third” GDP estimate released, and it is based on more complete source data than was available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 2.7%. The revision primarily reflected downward revisions to exports and consumer spending. Imports, a subtraction in the calculation of GDP, were revised down.

U.S. Bureau of Economic Analysis. Seasonally adjusted annual rates.

“The increase in real GDP primarily reflected increases in private inventory investment, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending that were partly offset by decreases in residential fixed investment and exports. Imports decreased.

Consumer Sentiment Drops

“Consumer sentiment fell for the first time in four months, dropping about 8% below February but remaining 4% above a year ago. This month’s turmoil in the banking sector had limited impact on consumer sentiment, which was already exhibiting downward momentum prior to the collapse of Silicon Valley Bank. Overall, our data revealed multiple signs that consumers increasingly expect a recession ahead. While sentiment fell across all demographic groups, the declines were sharpest for lower-income, less- educated, and younger consumers, as well as consumers with the top tercile of stock holdings. All five index components declined this month, led by a notably sharp weakening in one-year business conditions.

Year-ahead inflation expectations receded from 4.1% in February to 3.6%, the lowest reading since April 2021, but remained well above the 2.3-3.0% range seen in the two years before the pandemic. Long-run inflation expectations came in at 2.9% for the fourth consecutive month and stayed within the narrow 2.9- 3.1% range for 19 of the last 20 months.

But Consumer Confidence is Up

The Conference Board Consumer Confidence Index increased slightly in March to 104.2 (1985=100), up from 103.4 in February.

Further:

• The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—decreased to 151.1 (1985=100) from 153.0 last month.

• The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions— ticked up to 73.0 (1985=100) from 70.4 in February (a slight upward revision).

• However, for 12 of the last 13 months—since February 2022—the Expectations Index has been below 80, which often signals a recession within the next year. “Driven by an uptick in expectations, consumer confidence improved somewhat in March but remains below the average level seen in 2022 (104.5).

“The gain reflects an improved outlook for consumers under 55 years of age and for households earning $50,000 and over. While consumers feel a bit more confident about what’s ahead, they are slightly less optimistic about the current landscape. The share of consumers saying jobs are ‘plentiful’ fell, while the share of those saying jobs are ‘not so plentiful’ rose.

The latest results also reveal that their inflation expectations over the next 12 months remain elevated – at 6.3 percent. Overall purchasing plans for appliances continued to soften while automobile purchases saw a slight increase.”

Sources: The Conference Board; NBER

CPI Records Smaller Increase, But Food Index is Up 9.5% Over the Last Year

The U.S. Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers rose 0.4% in February after increasing 0.5% in January. Over the last 12 months, the all-items index increased by 6.0% before seasonal adjustment.

Source: U.S. Bureau of Labor Statistics.

Specifically:

• The index for shelter was the largest contributor to the monthly all-items increase, accounting for over 70% of the increase, with the indexes for food, recreation, and household furnishings and operations also contributing.

• The food index increased 0.4% over the month, with the food at home index rising 0.3%.

• The energy index decreased 0.6% over the month as the natural gas and fuel oil indexes declined.

• Categories that increased in February include shelter, recreation, household furnishings and operations, and airline fares.

• The index for used cars and trucks and the index for medical care were among those that decreased over the month.

Inflation Over the Past 12-Months

The all-items index increased 6.0% for the 12 months ending February; this was the smallest 12-month increase since the period ending September 2021.

• All items less food and energy index rose 5.5% over the last 12 months, its smallest 12-month increase since December 2021.

• The energy index increased 5.2% for the 12 months ending February.

• The food index increased by 9.5% over the last year.

Food Index

• The food index increased 0.4% in February, and the food at home index rose 0.3% over the month. Five major grocery store food group indexes increased over the month. The index for nonalcoholic beverages increased by 1.0% in February, after a 0.4% increase the previous month.

• The indexes for other food at home and for cereals and bakery products each rose 0.3% over the month. The index for fruits and vegetables increased by 0.2% in February, and the index for dairy and related products rose by 0.1%.

• In contrast, the meats, poultry, fish, and eggs index fell 0.1 percent over the month, the first decrease in that index since December 2021. The index for eggs fell 6.7% in February following sharp increases in recent months.

Existing Home Sales Jump in February

The National Association of Realtors reported that “existing-home sales reversed a 12-month slide in February, registering the largest monthly percentage increase since July 2020. Month-over-month sales rose in all four major U.S. regions. All regions posted year-over-year declines.

• Total existing-home sales completed transactions that include single-family homes, townhomes, condominiums, and co-ops – vaulted 14.5% from January to a seasonally adjusted annual rate of 4.58 million in February.

• Year-over-year, sales fell 22.6% (down from 5.92 million in February 2022).

• The total housing inventory registered at the end of February was 980,000 units, identical to January and up 15.3% from one year ago (850,000).

• Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.”

Prices Slide After 131 Months of Gains

• “The median existing-home price for all housing types in January was $363,000, a decline of 0.2% from February 2022 ($363,700), as prices climbed in the Midwest and South yet waned in the Northeast and West.

• This ends a streak of 131 consecutive months of year-over-year increases, the longest on record.

• Properties typically remained on the market for 34 days in February, up from 33 days in January and 18 days in February 2022.

• Fifty-seven percent of homes sold in February were on the market for less than a month.

• First-time buyers were responsible for 27% of sales in February, down from 31% in January and 29% in February 2022.

• All-cash sales accounted for 28% of transactions in February, down from 29% in January but up from 25% in February 2022.

• Distressed sales – foreclosures and short sales – represented 2% of sales in February, nearly identical to last month and one year ago.

Regional Breakdown

• Existing-home sales in the Northeast improved by 4.0%, down 25.7% from February 2022. The median price in the Northeast was $366,100, down 4.5% from the previous year.

• In the Midwest, existing-home sales grew 13.5%, declining 18.7% from one year ago. The median price in the Midwest was $261,200, up 5.0% from February 2022.

• Existing-home sales in the South rebounded 15.9% in February, a 21.3% decrease from the prior year. The median price in the South was $342,000, an increase of 2.7% from one year ago.

• In the West, existing-home sales rocketed 19.4% in February, down 28.3% from the previous year. The median price in the West was $541,100, down 5.6% from February 2022.”

Durable Goods Orders Drop Again

The U.S. Census Bureau announced the February advance report on durable goods manufacturers’ shipments, inventories, and orders:

Source: U.S. Census Bureau, Manufacturers’ Shipments, Inventories, and Orders, March 24, 2023.

New Orders

• New orders for manufactured durable goods in February, down three of the last four months, decreased $2.6 billion or 1.0% to $268.4 billion.

• This followed a 5.0% January decrease.

• Excluding transportation, new orders were virtually unchanged.

• Excluding defense, new orders decreased by 0.5%.

• Also down three of the last four months, transportation equipment drove the decrease, $2.6 billion or 2.8% to $89.4 billion.

Shipments

• In February, the shipment of manufactured durable goods in two consecutive months decreased by $1.5 billion or 0.6% to $274.8 billion.

• This followed a 0.4% January decrease.

• Also down two consecutive months, transportation equipment led the decrease, $1.3 billion or 1.4% to $90.1 billion.

Unfilled Orders

• Unfilled orders for manufactured durable goods in February, down two consecutive months, decreased $1.2 billion or 0.1% to $1,155.4 billion.

• This followed a virtually unchanged January decrease.

• Transportation equipment, down following twenty-one consecutive monthly increases, led the decrease, $0.7 billion or 0.1% to $683.8 billion.

Inventories

• Inventories of manufactured durable goods in February, up twenty-four of the last twenty- five months, increased $0.9 billion or 0.2% to $493.6 billion.

• This followed a 0.2% January decrease.

• Up three of the last four months, transportation equipment led the increase, $0.6 billion or 0.4% to $158.8 billion.

Capital Goods

• Nondefense new orders for capital goods in February decreased $1.0 billion or 1.2% to $82.0 billion.

• Shipments decreased by $0.5 billion or 0.6% to $83.2 billion.

• Unfilled orders decreased by $1.2 billion or 0.2% to $662.6 billion.

• Inventories increased by $0.5 billion or 0.2% to $218.8 billion.

• Defense new orders for capital goods in February decreased $1.2 billion or 7.4% to $14.5 billion.

• Shipments decreased by $0.2 billion or 1.6% to $14.6 billion.

• Unfilled orders decreased by $0.2 billion or 0.1% to $188.9 billion.

• Inventories increased by $0.1 billion or 0.3% to $23.3 billion.

Sources: dol.gov; nar.realtor; umich.edu; census.gov; bea.gov; fidelity.com; msci.com; nasdaq.com; wsj.com; morningstar.com

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Partnering with Outside The Box Financial Planning offers numerous benefits for individuals seeking retirement planning, small business support, wealth management, and beyond.  With their fiduciary duty, comprehensive approach, unbiased advice, transparent fee structure, and ongoing support, OTBFP act as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations. 

However, if you would like to take a shot at building a financial plan on your own, we offer our financial planning software, RightCapital, free of charge. Click here to get started.

Markets Have (Mostly) Good Fourth Quarter

Global equity markets had a pretty good fourth quarter – except for the tech names – and when the final Wall Street-bell weakly tolled on Friday, December 30th, most of the major global equity markets were positive, notwithstanding the pullback seen during the month of December.

Despite the overall losses for the year, the DJIA and S&P 500 did manage the first positive quarter for the year, whereas NASDAQ – dominated by the tech names – managed to see its fourth consecutive quarterly loss – its first time since 2001.

For the fourth quarter of 2022:

• The DJIA advanced 15.4%;

• The S&P 500 gained 7.1%;

• NASDAQ lost 1.1%; and

• The Russell 2000 added 3.6%.

The themes that drove market performance in the 4th quarter were consistent from previous quarters – inflation fears and hopes that the Fed might slow its pace and magnitude of rate hikes. And while inflation remained stubbornly high as readings of the CPI and the PPI were improved, the Fed did reduce its 7th rate hike magnitude from 75 basis points to 50.

The other themes were at odds with one another at times: rising consumer and investor confidence; rising food and gas prices, positive GDP numbers, a cooling-off of the housing market, better-than-expected manufacturing data; not-so-great corporate earnings, and continued supply-chain bottlenecks.

Further, we saw that:

• Volatility, as measured by the VIX, trended down this quarter, beginning the quarter around 31 and ending near 22, with a peak in mid-October.

• West Texas Intermediate crude trended down for the quarter too, starting at just over $86/barrel and ending the quarter at just under $77, about where it stood one year ago.

Market Performance Around the World

Investors were very happy with the quarterly performance around the world, as all 36 developed markets tracked by MSCI were positive for the fourth quarter of 2022 – with most recording positive returns in the double digits. And for the 40 developing markets tracked by MSCI, 38 of them were positive too, with many emerging markets in Europe gaining more than 30%.

Source: MSCI. Past performance cannot guarantee future results

Sector Performance Rotated in Q42022

The overall trend for sector performance for the fourth quarter was good, as 9 of the 11 sectors advanced, with 6 advancing by double-digits.

Compare that to an ugly third quarter, where 10 of the 11 S&P 500 sectors dropped with only Consumer Discretionary staying positive. And as happened in each quarter last year, the performance leaders and laggards rotated throughout the quarter and the ranges were substantial.

Here are the sector returns for the third and fourth quarters of 2022:

Source: FMR

Reviewing the sector returns for just the fourth quarter of 2022, we saw that:

• Almost all sectors were painted green, although the Consumer Discretionary sector took a big hit;

• 6 of the 11 sectors saw double-digit gains in the fourth quarter, including the Energy sector which jumped more than 20%;

• The defensive sectors (think Materials and Industrials) turned in a great quarter as did the interest-rate sensitive sectors (think Financials); and

• The differences between the best (+20%) performing and worst (-17%) performing sectors in the fourth quarter was massive.

GDP Down in 3rd Quarter

At the end of the quarter, the Bureau of Economic Analysis reported that real gross domestic product increased at an annual rate of 3.2% in the third quarter of 2022. In the second quarter, real GDP decreased 0.6%.

U.S. Bureau of Economic Analysis. Seasonally adjusted annual rates

Further: “In the third quarter of 2022, as real GDP for the nation increased at an annual rate of 3.2%, real GDP increased in 16 of the 23 industry groups for which BEA prepares quarterly state estimates.

• Information services; professional, scientific, and technical services; and mining were the leading contributors to the increase in real GDP nationally.

• The mining industry was the leading contributor to the increases in real GDP in Alaska, Texas, Oklahoma, Wyoming, North Dakota, and New Mexico, the six states with the largest increases in real GDP, and in West Virginia, the state with the eighth-largest increase in real GDP.

Personal income increased in all 50 states and the District of Columbia in the third quarter, with the percent change ranging from 14.2% in Colorado to 1.4% in Kentucky.

Fed Raises Rates for the 7th Time

In mid-December, the Fed announced a 50 basis points rate hike to the fed funds rate (its 7th rate hike in 2022) and then released the following statement: “Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.

Russia’s war against Ukraine is causing tremendous human and economic hardship. The war and related events are contributing to upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks.”

This seventh rate hike this year – and the second one in the 4th quarter – were some of the more predicted rate movement the markets have ever seen.

Fed Rate Hikes: Taming Inflation

In addition, Wall Street is expecting the federal funds rate to move above 5% in 2023.

Inflation Still Stubbornly High

The Bureau of Labor Statistics announced the Consumer Price Index for All Urban Consumers (CPI- U) rose 0.1% in November on a seasonally adjusted basis, after increasing 0.4% in October.

In addition, over the last 12 months, the all items index increased 7.1% before seasonal adjustment.

With core prices – excluding the volatile food and energy costs – inflation was up 6.0%. Economists surveyed by the Wall Street Journal had expected an increase of 7.3% for headline CPI and 6.1% for core inflation.

12-month percentage change, Consumer Price Index, selected categories, November 2022, not seasonally adjusted.

Source: U.S. Bureau of Labor Statistics.

Further:

The index for shelter was by far the largest contributor to the monthly all items increase, more than offsetting decreases in energy indexes.

• The food index increased 0.5% over the month with the food at home index also rising 0.5%.

• The energy index decreased 1.6% over the month as the gasoline index, the natural gas index, and the electricity index all declined.

• The index for all items less food and energy rose 0.2% in November, after rising 0.3% in October.

• The indexes for shelter, communication, recreation, motor vehicle insurance, education, and apparel were among those that increased over the month.

• Indexes which declined in November include the used cars and trucks, medical care, and airline fares indexes.

Cooling Off Housing Market

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced the following new residential construction statistics for November 2022:

Sales of new single‐family houses in November 2022 were at a seasonally adjusted annual rate of 640,000

• This is 5.8% above the revised October rate of 605,000, but is 15.3% below the November 2021 estimate of 756,000

• The median sales price of new houses sold in November 2022 was $471,200

• The average sales price was $543,600

• The seasonally‐adjusted estimate of new houses for sale at the end of November was 461,000. This represents a supply of 8.6 months at the current sales rate.

Consumer Confidence Jumps

“The Conference Board Consumer Confidence Index increased in December following back-to-back monthly declines. The Index now stands at 108.3 (1985=100), up sharply from 101.4 in November.

• The Present Situation Index—based on consumers’ assessment of current business and labor market conditions – increased to 147.2 from 138.3 last month.

• The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – improved to 82.4 from 76.7. However, Expectations are still lingering around 80 – a level associated with recession.

“Consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April 2022. The Present Situation and Expectations Indexes improved due to consumers’ more favorable view regarding the economy and jobs. Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus. Vacation intentions improved but plans to purchase homes and big-ticket appliances cooled further. This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes.”

Present Situation
Consumers’ assessment of current business conditions improved in December.

• 19.0% of consumers said business conditions were “good,” up from 17.8%.

• 20.1% said business conditions were “bad,” down from 23.6%.

Consumers’ appraisal of the labor market was also more favorable.

• 47.8% of consumers said jobs were “plentiful,” up from 45.2%.

• 12.0% of consumers said jobs were “hard to get,” down from 13.7%.

Expectations Six Months Hence
Consumers were less pessimistic about the short-term business conditions outlook in December.

• 20.4% of consumers expect business conditions to improve, up from 19.8%.

• 20.3% expect business conditions to worsen, down from 21.0%.

Consumers were more upbeat about the short-term labor market outlook.

• 19.5% of consumers expect more jobs to be available, up from 18.5%.

• 18.3% anticipate fewer jobs, down from 21.2%.

Consumers were mixed about their short- term income prospects.

• 16.7% of consumers expect their incomes to increase, down slightly from 17.1%.

• However, 13.3% expect their incomes will decrease, down from 15.8%.

Retail Sales Down

The U.S. Census Bureau announced that U.S. retail and food services sales for November 2022, were $689.4 billion, down 0.6% from the previous month, but up 6.5% above November 2021.

• Total sales for the September 2022 through November 2022 period were up 7.7% from the same period a year ago.

• Retail trade sales were down 0.8% from October 2022, but up 5.4% above last year.

• Gasoline stations were up 16.2% from November 2021, while food services and drinking places were up 14.1% from last year

Monthly Retail Sales: Past 20 Years

Consumer Sentiment Jumps

The University of Michigan released its index of Consumer Sentiment and reported that “consumer sentiment confirmed the preliminary reading earlier this month, rising 5% above November. Sentiment remains relatively downbeat at 15% below a year ago, but consumers’ extremely negative attitudes have softened this month on the basis of easing pressures from inflation. One-year business conditions surged 25%, and the long-term outlook improved a more modest but still sizable 9%. Still, both measures are well below 2021 readings. Assessments of personal finances, both current and future, are essentially unchanged from November.

Year-ahead inflation expectations improved considerably but remained elevated, falling from 4.9% in November to 4.4% in December, the lowest reading in 18 months but still well above two years ago. Declines in short-run inflation expectations were visible across the distribution of age, income, education, as well as political party identification. At 2.9%, long run inflation expectations have stayed within the narrow, albeit elevated, 2.9-3.1% range for 16 of the last 17 months. While the sizable decline in short-run inflation expectations may be welcome news, consumers continued to exhibit substantial uncertainty over the future path of prices.”

Exports and Imports Down

The U.S. Census Bureau announced the following international trade, wholesale inventories, and retail inventories advance statistics for November 2022:

Advance International Trade in Goods

• The international trade deficit was $83.3 billion in November, down $15.5 billion from $98.8 billion in October.

• Exports of goods for November were $168.9 billion, $5.3 billion less than October exports.

• Imports of goods for November were $252.2 billion, $20.8 billion less than October imports.

Advance Wholesale Inventories

• Wholesale inventories for November, adjusted for seasonal variations and trading day differences, but not for price changes, were estimated at an end-of-month level of $933.6 billion, up 1.0% from October 2022.

• This is up 21.0% from November 2021.

• The September 2022 to October 2022 percentage change was revised from up 0.5% to up 0.6%.

Advance Retail Inventories

• Retail inventories for November, adjusted for seasonal variations and trading day differences, but not for price changes, were estimated at an end-of-month level of $738.7 billion, up 0.1% from October 2022.

• This is up 18.4% from November 2021.

• The September 2022 to October 2022 percentage change was revised from down 0.2% to down 0.4%.

Sources: bls.gov; bea.gov; census.gov; umich.edu; conference- board.org; census.gov; msci.com; fidelity.com; msci.com; nasdaq.com; wsj.com; morningstar.com

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